White House Petition to Lower Student Loan Interest Rates

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MyNameIsFlynn!
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Re: White House Petition to Lower Student Loan Interest Rates

Postby MyNameIsFlynn! » Thu Apr 11, 2013 10:56 pm

drinion wrote:
MyNameIsFlynn! wrote:
drinion wrote:
MyNameIsFlynn! wrote:The government doesn't just replicate the private sector. There's a significant chunk of people who can't finance their education privately for lack of co-signer, credit, etc. Many types of USE.D. loans - at least in the amounts that would be needed to finance an education at a public school, community college, or junior college - only require the borrower to be a citizen and have a pulse.

And it's even worse for grad school. What private lender in their right mind would lend someone six figures to attend Cooley or (insert shit school here)? That's right - nobody would. So the government steps in to fulfill a perceived need and in doing so fucks over students by enabling them to graduate from shit schools with useless degrees. And thousands or hundreds of thousands in debt that will take years or decades to pay off, if they're even able to pay it off in full


The ABA should have better accreditation standards.


This is true but misses the point. Below-market interest rates distort the actual cost of education at all levels, not just professional.

As for discharging in bankruptcy, that gives the government an even larger role in the education loan industry. If they're discharge able, then what incentive do students have to pay them back? Kids could just rack up 200k undergrad debt (and another 100-300 in grad or professional if they want) and declare bankruptcy upon graduation. Voila, you've got you're degree(s) and no debt. Before you say "but who would fuck up their credit like this?" think about all the dipshits you know. There's plenty of people who would take this route. And this possibility would scare the shit out of private lenders, meaning more govt loans.


The federal loans only distort the "market price" of education. The government makes the loans because that "market price" would not allow most people to affordably educate themselves. Granted, this increase in demand for seats increases the price of the seats, but the loans weren't meant to lower the price. The petition is for the government to use the loans for their intended purpose, not to use them to fund other parts of its education budget.


Subsidized loans and below-market rates might not be "meant" to lower the cost of education but the reality is that they enable people to afford an education by lowering the price, specifically through lower borrowing costs, so your distinction is meaningless. The only way you make education more affordable is by lowering the price they pay, the only mechanism the federal government has to accomplish this outside the tax code is education loans (unless I'm missing out on something here?)

Of course the affordability argument relies on thr questionable assumption that every person should attain some form of higher education, which probably deserves its own thread.

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drinion
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Re: White House Petition to Lower Student Loan Interest Rates

Postby drinion » Thu Apr 11, 2013 11:13 pm

MyNameIsFlynn! wrote:
Subsidized loans and below-market rates might not be "meant" to lower the cost of education but the reality is that they enable people to afford an education by lowering the price, specifically through lower borrowing costs, so your distinction is meaningless. The only way you make education more affordable is by lowering the price they pay, the only mechanism the federal government has to accomplish this outside the tax code is education loans (unless I'm missing out on something here?)

Of course the affordability argument relies on thr questionable assumption that every person should attain some form of higher education, which probably deserves its own thread.


The loans lower the borrowing cost, but they are also offered to everyone who is accepted to a school, as you pointed out earlier. These two policies lead to people paying for their education in the future at a rate as close to its actual price as possible. Without the loans, you would have to pay for it now or you would have to pay for it in the future at a rate significantly higher than its actual price. The loans level the playing field to maintain something approximating a meritocracy.

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grossindiscretion
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Re: White House Petition to Lower Student Loan Interest Rates

Postby grossindiscretion » Sun Apr 14, 2013 12:42 am

drinion wrote:
MyNameIsFlynn! wrote:
Subsidized loans and below-market rates might not be "meant" to lower the cost of education but the reality is that they enable people to afford an education by lowering the price, specifically through lower borrowing costs, so your distinction is meaningless. The only way you make education more affordable is by lowering the price they pay, the only mechanism the federal government has to accomplish this outside the tax code is education loans (unless I'm missing out on something here?)

Of course the affordability argument relies on thr questionable assumption that every person should attain some form of higher education, which probably deserves its own thread.


The loans lower the borrowing cost, but they are also offered to everyone who is accepted to a school, as you pointed out earlier. These two policies lead to people paying for their education in the future at a rate as close to its actual price as possible. Without the loans, you would have to pay for it now or you would have to pay for it in the future at a rate significantly higher than its actual price. The loans level the playing field to maintain something approximating a meritocracy.


I don't think the bolded is true. If the government were to stop offering student loans, a step I would support, then most students loans would probably be obtained through private lenders. Private lenders reward meritorious cases with better loans. Isn't that meritocratic? or do I misunderstand?

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Elston Gunn
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Re: White House Petition to Lower Student Loan Interest Rates

Postby Elston Gunn » Sun Apr 14, 2013 12:50 am

grossindiscretion wrote:
drinion wrote:
MyNameIsFlynn! wrote:
Subsidized loans and below-market rates might not be "meant" to lower the cost of education but the reality is that they enable people to afford an education by lowering the price, specifically through lower borrowing costs, so your distinction is meaningless. The only way you make education more affordable is by lowering the price they pay, the only mechanism the federal government has to accomplish this outside the tax code is education loans (unless I'm missing out on something here?)

Of course the affordability argument relies on thr questionable assumption that every person should attain some form of higher education, which probably deserves its own thread.


The loans lower the borrowing cost, but they are also offered to everyone who is accepted to a school, as you pointed out earlier. These two policies lead to people paying for their education in the future at a rate as close to its actual price as possible. Without the loans, you would have to pay for it now or you would have to pay for it in the future at a rate significantly higher than its actual price. The loans level the playing field to maintain something approximating a meritocracy.


I don't think the bolded is true. If the government were to stop offering student loans, a step I would support, then most students loans would probably be obtained through private lenders. Private lenders reward meritorious cases with better loans. Isn't that meritocratic? or do I misunderstand?

Private lenders reward people with co-signers with high incomes. It really exacerbates inequality. A better solution might be to have the schools be at least partially on the hook for any unpaid loan balances.

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Elston Gunn
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Re: White House Petition to Lower Student Loan Interest Rates

Postby Elston Gunn » Sun Apr 14, 2013 12:52 am

MyNameIsFlynn! wrote:
drinion wrote:
MyNameIsFlynn! wrote:This sounds like a great idea! It's not like below-market interest rates are partially responsible for the rapid increase in tuition in the past few years. So if we cut borrowing rates even further, putting more money in students pockets, there's no way schools will take advantage of lower borrowing rates to increase their tuition even further!!


So you would prefer them to increase the rates?


Ideally I would prefer the government get out of the education loan industry entirely. That's not politically feasible, so yes, I would like to see the USED adjust rates to bring them in line wth the private sector.

Obviously it depends on the student, but I could definitely get lower rates from a private lender, but my school and the government's loan protection programs wouldn't cover them and they'd be variable, which is just pretty damn scary. I don't think it's unreasonable to say 7.9% is too high.

eric922
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Re: White House Petition to Lower Student Loan Interest Rates

Postby eric922 » Sun Apr 14, 2013 12:55 am

Elston Gunn wrote:
MyNameIsFlynn! wrote:
drinion wrote:
MyNameIsFlynn! wrote:This sounds like a great idea! It's not like below-market interest rates are partially responsible for the rapid increase in tuition in the past few years. So if we cut borrowing rates even further, putting more money in students pockets, there's no way schools will take advantage of lower borrowing rates to increase their tuition even further!!


So you would prefer them to increase the rates?


Ideally I would prefer the government get out of the education loan industry entirely. That's not politically feasible, so yes, I would like to see the USED adjust rates to bring them in line wth the private sector.

Obviously it depends on the student, but I could definitely get lower rates from a private lender, but my school and the government's loan protection programs wouldn't cover them and they'd be variable, which is just pretty damn scary. I don't think it's unreasonable to say 7.9% is too high.

But on the other hand if things got too bad wouldn't they be dischargable via bankruptcy?

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TaipeiMort
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Re: White House Petition to Lower Student Loan Interest Rates

Postby TaipeiMort » Sun Apr 14, 2013 12:56 am

A better petition would ask the white house to make sure that student loan rates price discriminate.

A metric could easily be made to analyze the likelihood of repayment of each group.

For example, a Yale law student has a pretty strong likelihood of repayment. They should only pay something like a 2 percent interest rate. A Cooley law grad should have to take out the same loans with an 18 percent interest rate or something.

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Elston Gunn
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Re: White House Petition to Lower Student Loan Interest Rates

Postby Elston Gunn » Sun Apr 14, 2013 1:00 am

eric922 wrote:
Elston Gunn wrote:Obviously it depends on the student, but I could definitely get lower rates from a private lender, but my school and the government's loan protection programs wouldn't cover them and they'd be variable, which is just pretty damn scary. I don't think it's unreasonable to say 7.9% is too high.

But on the other hand if things got too bad wouldn't they be dischargable via bankruptcy?

Nope. A student loan is a student loan is a student loan (I think).

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Tom Joad
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Re: White House Petition to Lower Student Loan Interest Rates

Postby Tom Joad » Sun Apr 14, 2013 1:05 am

So OP is a guy who doesn't understand anything?

Universities charge what they think people will be willing to pay for their education. If federal student loan interest rates go down, tuition will just go up and the total cost will be about the same, with more money going to the schools and less to the government.

A better solution would bankruptcy dischargable student loans that evaluate default risk on an individual basis.

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Elston Gunn
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Re: White House Petition to Lower Student Loan Interest Rates

Postby Elston Gunn » Sun Apr 14, 2013 1:13 am

Tom Joad wrote:So OP is a guy who doesn't understand anything?

Universities charge what they think people will be willing to pay for their education. If federal student loan interest rates go down, tuition will just go up and the total cost will be about the same, with more money going to the schools and less to the government.

A better solution would bankruptcy dischargable student loans that evaluate default risk on an individual basis.

How much do you think the interest rate on Grad PLUS loans affects the decision-making process of the average 22 year old deciding to go to law school? I'd guess in 80% of cases, the person literally doesn't even think about it.

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dr123
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Re: White House Petition to Lower Student Loan Interest Rates

Postby dr123 » Sun Apr 14, 2013 1:22 am

online petitions are fucking stupid

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sinfiery
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Re: White House Petition to Lower Student Loan Interest Rates

Postby sinfiery » Sun Apr 14, 2013 1:23 am

dr123 wrote:online petitions are fucking stupid

i disagree

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Tom Joad
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Re: White House Petition to Lower Student Loan Interest Rates

Postby Tom Joad » Sun Apr 14, 2013 1:31 am

Elston Gunn wrote:
Tom Joad wrote:So OP is a guy who doesn't understand anything?

Universities charge what they think people will be willing to pay for their education. If federal student loan interest rates go down, tuition will just go up and the total cost will be about the same, with more money going to the schools and less to the government.

A better solution would bankruptcy dischargable student loans that evaluate default risk on an individual basis.

How much do you think the interest rate on Grad PLUS loans affects the decision-making process of the average 22 year old deciding to go to law school? I'd guess in 80% of cases, the person literally doesn't even think about it.

I may be an optimist, but I think any changes get factored into demand within a few years (~5 years?). Within a few years there are at least media accounts of struggling grads, like there are now. Even taken as a whole, from Cooley to Yale, admitted law students are, I'm guessing here, among the top 10 percent of the most educated people in the US for their age. If any large group of 22 year olds is going to behave close to rationally, admitted law students has to be one of the top cohorts. Also, I think the continuing decline in LSAT takers supports my argument. You are definitely right in large part. As long as I live, as bad as things get, if some people can get the loans they will go to law school. But I think there is a large enough group of close to rational actors that affect pricing significantly.

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Richie Tenenbaum
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Re: White House Petition to Lower Student Loan Interest Rates

Postby Richie Tenenbaum » Sun Apr 14, 2013 1:35 am

This petition seems to be ignoring the fact that federal students have helped cause the current education bubble. How about we encourage less people to go to college and to get grad degrees, since the cost of education in many different areas and for a ton of schools is now way more than the actual value?

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sinfiery
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Re: White House Petition to Lower Student Loan Interest Rates

Postby sinfiery » Sun Apr 14, 2013 1:42 am

Richie Tenenbaum wrote:This petition seems to be ignoring the fact that federal students have helped cause the current education bubble. How about we encourage less people to go to college and to get grad degrees, since the cost of education in many different areas and for a ton of schools is now way more than the actual value?


I think better employment data and a greater understanding of finance basics is the only way that is going to happen.

It's slowly happening but I fear changes may grow stagnant. I'm not sure how you can demand this from a set of Universities since they presumably only have money to lose by the publishing of this data.

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Elston Gunn
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Re: White House Petition to Lower Student Loan Interest Rates

Postby Elston Gunn » Sun Apr 14, 2013 1:45 am

Tom Joad wrote:
Elston Gunn wrote:
Tom Joad wrote:So OP is a guy who doesn't understand anything?

Universities charge what they think people will be willing to pay for their education. If federal student loan interest rates go down, tuition will just go up and the total cost will be about the same, with more money going to the schools and less to the government.

A better solution would bankruptcy dischargable student loans that evaluate default risk on an individual basis.

How much do you think the interest rate on Grad PLUS loans affects the decision-making process of the average 22 year old deciding to go to law school? I'd guess in 80% of cases, the person literally doesn't even think about it.

I may be an optimist, but I think any changes get factored into demand within a few years (~5 years?). Within a few years there are at least media accounts of struggling grads, like there are now. Even taken as a whole, from Cooley to Yale, admitted law students are, I'm guessing here, among the top 10 percent of the most educated people in the US for their age. If any large group of 22 year olds is going to behave close to rationally, admitted law students has to be one of the top cohorts. Also, I think the continuing decline in LSAT takers supports my argument. You are definitely right in large part. As long as I live, as bad as things get, if some people can get the loans they will go to law school. But I think there is a large enough group of close to rational actors that affect pricing significantly.

I agree that attendance is responsive to price. My point is that high interest rates hide the ball to a lot of people. I honestly think more people would want to attend a school that costs $210,000 with 7.9% interest than one that costs $260,000 with 1% interest.
I also don't think schools are nearly as nakedly business-like as you implied. If Yale wanted to, they could charge $500,000 and have no loan repayment program and still fill their class. They have other motivations as well.

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Tom Joad
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Re: White House Petition to Lower Student Loan Interest Rates

Postby Tom Joad » Sun Apr 14, 2013 1:53 am

Elston Gunn wrote:I agree that attendance is responsive to price. My point is that high interest rates hide the ball to a lot of people. I honestly think more people would want to attend a school that costs $210,000 with 7.9% interest than one that costs $260,000 with 1% interest.
I also don't think schools are nearly as nakedly business-like as you implied. If Yale wanted to, they could charge $500,000 and have no loan repayment program and still fill their class. They have other motivations as well.

I definitely agree in large part on both counts, but I think a large enough group of people pays attention to costs and benefits to get the price close to what it should be. And other interests schools have push them to keep their prices competitive. If Yale cost $500,000, 90% of the Yale admits would go to Harvard and Stanford, and Yale would drop in ranking. Then they could no longer charge so much.

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dr123
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Re: White House Petition to Lower Student Loan Interest Rates

Postby dr123 » Sun Apr 14, 2013 2:05 am

sinfiery wrote:
Richie Tenenbaum wrote:This petition seems to be ignoring the fact that federal students have helped cause the current education bubble. How about we encourage less people to go to college and to get grad degrees, since the cost of education in many different areas and for a ton of schools is now way more than the actual value?


I think better employment data and a greater understanding of finance basics is the only way that is going to happen.

It's slowly happening but I fear changes may grow stagnant. I'm not sure how you can demand this from a set of Universities since they presumably only have money to lose by the publishing of this data.


for grad program, yea. Undergrad? LOLNO.


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drinion
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Re: White House Petition to Lower Student Loan Interest Rates

Postby drinion » Mon Apr 15, 2013 6:22 pm



The Obama administration frequently makes the right proposals, but they backdown from them all too often.

Sign the petition to make sure they don't!

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drinion
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Re: White House Petition to Lower Student Loan Interest Rates

Postby drinion » Mon Apr 15, 2013 6:49 pm

Tom Joad wrote:So OP is a guy who doesn't understand anything?

Universities charge what they think people will be willing to pay for their education. If federal student loan interest rates go down, tuition will just go up and the total cost will be about the same, with more money going to the schools and less to the government.

A better solution would bankruptcy dischargable student loans that evaluate default risk on an individual basis.


This post is representative of a lot of the others, so I'll respond to it, and ignore the rest.

The petition doesn't claim to be a proposal to fix the problems of higher education in this country. It simply asks that the government stop loaning students money at unnecessarily high interest rates.

The decreased interest rates would allow students to pay their debt off more quickly. Some people might decide to borrow more money as a result, but many people would not. I, for one, know that I would not borrow more money.

Many of you also seem to ignore the reason the government makes these loans. The loans are made because people should be able to educate themselves according to their academic ability or merit. If someone is accepted to a school, they should be able to attend that school at the same cost as anyone else. Government loans allow for the closest approximation of that ideal. Maybe you don't think some schools should exist, but that is not the concern of the petition. Feel free to make your own anti-Cooley petition if you want though.
Last edited by drinion on Mon Apr 15, 2013 10:42 pm, edited 1 time in total.

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thelawyler
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Re: White House Petition to Lower Student Loan Interest Rates

Postby thelawyler » Mon Apr 15, 2013 7:06 pm

Also, the idea that schools will raise tuition to compensate for lowered interest rates probably ignores:

1) Many consumers/students don't account for interest when they sign for their loans. Thus it will likely have a negligible effect on the "demand" for higher-education loans (as in, demand will not increase as a result of lower interest rate, and thus schools won't find an irresistible urge to increase tuition)

2) The interest is going the government, not the school. So the schools will not be seeing any reduced profits, and will have no need to compensate for the lower interest rates by raising tuition.




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